Sunday, September 24, 2023

Microsoft says Xbox Game Pass is profitable because subscription growth is slow

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Microsoft Gaming CEO Phil Spencer has revealed that the company’s Xbox Game Pass subscription service is already profitable. speak on The Wall Street Journal‘s Tech Live ConferenceSpencer also revealed that Xbox Game Pass makes up about 15 percent of Microsoft’s total revenue from Xbox content and services.

Spencer says he now expects Xbox Game Pass to remain about 10-15 percent of Microsoft’s Xbox content and services revenue and that “it’s profitable for us.”

“Game Pass as a general part of our content and services revenue is likely to be 15 percent,” Spencer said. “I don’t think it gets any bigger than that. I think total revenue will grow 15 percent like that, but we don’t have a future where I think 50-70 percent of our revenue will come from subscriptions.”

Xbox Game Pass console subscription growth has slowed

It’s a rare insight into Microsoft’s Xbox console and Game Pass subscription business, especially since Spencer suggests Xbox Game Pass won’t dominate Microsoft’s gaming revenue. There’s a reason for this, as there are only a limited number of Xbox console owners who can subscribe to the service.

“We’re seeing incredible growth in PC… On console, I’ve seen growth slow down, especially because at some point you’ve reached everyone on console who wants to subscribe,” explains Spencer.

PC Game Pass is booming.

PC Game Pass is booming.
Image: Microsoft

Microsoft is building an Xbox mobile gaming store to take on Apple and Google, but it will face challenges with the growing Xbox Game Pass on platforms like iOS, where it’s currently impossible to rival rival stores and even cloud-based games. gaming apps. Spencer acknowledged those challenges, but he thinks Microsoft is playing the long game on an Xbox mobile store.

“If you’re making a long-term bet, which we’re doing, that we’re going to have access to players on the biggest platforms people play on – Android and iOS phones – we want to be in a position with content, players and storefront capabilities to capitalize on this.” Microsoft’s Activision Blizzard deal is key to the company’s mobile gaming efforts, and it is quietly building an Xbox mobile store that will rely on Activision and King games.

Awards were another hot topic during Spencer’s performance on WSJ Tech Live. While Microsoft hasn’t increased the price of Xbox Game Pass or its Xbox consoles, it may not be for long, and Spencer has hinted that changes are on the way in the future.

“We’ve kept the price on our console, we’ve kept the price on games and our subscription. I don’t think we’ll be able to do that forever,” admits Spencer. need to raise certain things, but when we went into this holiday we thought it was very important that we keep the prices that we have.”

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